02399cam a22002777 4500001000700000003000500007005001700012008004100029100002600070245014900096260006600245490004200311500001800353520114500371530006101516538007201577538003601649690005701685690013901742700002301881700002301904710004201927830007701969856003802046856003702084w15416NBER20170818013347.0170818s2009 mau||||fs|||| 000 0 eng d1 aHerrendorf, Berthold.10aTwo Perspectives on Preferences and Structural Transformationh[electronic resource] /cBerthold Herrendorf, Richard Rogerson, Ákos Valentinyi. aCambridge, Mass.bNational Bureau of Economic Researchc2009.1 aNBER working paper seriesvno. w15416 aOctober 2009.3 aWe ask what specification of preferences can account for the changes in the expenditure shares of broad sectors that are associated with the process of structural transformation in the U.S. since 1947. Following the tradition of the expenditure systems literature, we first calibrate utility function parameters using NIPA data on final consumption expenditure. We find that a Stone-Geary specification fits the data well. While useful, this exercise does not tell the researcher what utility function to use in a model that posits sectoral production functions in value added form. We therefore develop a method to calculate the value added components of consumption categories that are consistent with value added production functions, and use these data to calibrate a utility function over sectoral consumption value added. We find that a Leontief specification fits the data well. Interestingly, the two specifications display very different properties: for final consumption expenditure income effects are the dominant force behind changes in expenditure shares whereas for consumption value added relative price effects are dominant. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aE20 - General2Journal of Economic Literature class. 7aO14 - Industrialization • Manufacturing and Service Industries • Choice of Technology2Journal of Economic Literature class.1 aRogerson, Richard.1 aValentinyi, Ákos.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w15416.4 uhttp://www.nber.org/papers/w1541641uhttp://dx.doi.org/10.3386/w15416